Economic reforms to help support long-term growth, says BMI Research

India is expected to remain one of the fastest growing emerging markets with real GDP growth averaging 6.5 per cent over the next five fiscals, though bureaucratic inefficiencies will continue to cap the country’s growth potential, says a report. According to a report by BMI Research, a Fitch Group company, while India’s ease of doing business ranking has improved, significant bureaucratic inefficiencies are likely to cap the country’s growth potential further. “We believe that the ongoing economic reforms and improvements to the business environment will continue to support India’s economic growth over the coming years, and we expect the country to be one of the best performing emerging market economies, with real GDP growth set to average 6.5 per cent over the next five fiscal years,” the report said. However, the improvement in the ranking masks the fact that bureaucratic inefficiencies remain rife, as indicated by the stalling of the 2015 Land Acquisition Bill in Parliament and a massive backlog of unresolved cases in courts. “In our view, these issues are likely to continue to cap India’s growth potential below the 7 per cent level over the coming years, and the country is likely to continue facing challenges in completing large-scale infrastructure projects and establishing a strong manufacturing base,” it added.
Praising the efforts of Prime Minister Narendra Modi to carry forward reforms, including unification of indirect taxes, the World Bank CEO said the GST reform creates an incredible opportunity for India to grow through unified internal market. There is visible impact of reforms on foreign investment, she said, adding that foreign direct investment (FDI) has doubled to USD 60 billion from USD 36 billion in 2013-14. Besides, she said, investment in infrastructure building, investment in its people and strengthening of cooperative and competitive federalism are foundation for more progress in the future. “We know that there is a very strong condition that extreme poverty would be history in India. The target date that was set 2026, I understand that the Prime Minister intends to shorten to 2022. Given the track record so far, I have no doubt that would be possible. “And I have no doubt that when India hits another century, the century of independence in 2047, most people in India would be the part of global middle class. India will be a high middle income country,” she said.